T

he weakening of the rupiah against the US dollar has left major retailers in the country with no choice but to increase the price of their products to offset ballooning production costs.

Some companies, however, are trying to maintain current prices in light of the diminishing purchasing power experienced by customers.

Publicly listed consumer-goods producer PT Unilever Indonesia, for instance, increased its prices by an average of 1 percent in August, which was the second price hike decision made by the company this year after the previous 1 percent increase imposed in March.

Last year, the local arm of Anglo-Dutch consumer-goods manufacturer Unilever NV and plc adjusted its prices twice, comprising a 4 to 5 percent hike in March and another 5 percent rise in September.

Unilever Indonesia governance and corporate affairs director Sancoyo Antarikso said recently the price increases occurred following the plummeting rupiah.

'€œAround 50 to 55 percent of the products'€™ components are related to the currency volatility,'€ he said, giving the price of crude palm oil (CPO) as an example.

'€œWe buy those [CPO] using rupiah but the market price is determined in US dollars,'€ he said, adding that the situation affected his firm'€™s production costs.

The value of the rupiah against the greenback continued its slide last week with a new record marked last Wednesday when the currency broke the psychological barrier of 14,000, closing at 14,133, a level unseen since the 1998 financial crisis.

The rupiah has weakened by more than 12 percent since the beginning of this year. However, the rupiah experienced a slight recovery on Friday when it closed at 13,983.

Meanwhile, Triyono Prijosoesilo, chairman of the Association of Indonesian Soft Drink Producers (Asrim), said its association members were still trying to keep prices at current levels because of the decline in consumer purchasing power.

'€œOur products are tertiary goods, so if their prices rise, our products will be the first to be left [by consumers],'€ he said over the weekend.

Refined sugar, aluminum and certain types of plastic packages were among the imported materials, he said.

In addition, retailer Transmart Carrefour corporate communications general manager Satria Hamid said recently that reduced purchasing power had caused customers to be selective in buying goods.

'€œThey only buy things they really need,'€ he said, adding that price hike decisions made by retailers depended in turn on prices set by suppliers or producers.

Meanwhile, several retailers have been working with credit card issuers and suppliers to offer various promotions to lure customers, he said.

Azza Waslati, a mother of three living in Cibubur, West Java, has noticed the rise in prices since July.

'€œI have started to look for promotions offered by supermarkets as my weekly budget is now only enough to last three to four days,'€ she said on Sunday, noting that some supermarkets she frequented had increased the prices of certain products while maintaining the stability of other prices.

Azza further indicated she now preferred to buy eggs instead of poultry as the price of poultry has jumped to Rp 40,000 (US$2.84) per kilogram from around Rp 35,000.

'€œMaybe this is the time to start eating more greens,'€ she said while laughing, adding that vegetables had had the smallest price hikes. (prm)